A Stamp Duty Free-for-All, BUY NOW!?

Well if there is one bit of good news that came out of this Covid-19 Pandemic it's the sheer amount of help displayed from the government to assist those in need. We all know by now the extent of the grants and breaks for most of those in the economy, now the housing market needs a push.

Estate agents are rejoicing in easy sales now as with the axe of stamp duty up to £500,000 it certainly means a considerable cash discount on purchasing a (next) home. Imagine not having to fork out with the £15,000 required on a £500,000 purchase price certainly makes a considerable difference! 

And for investors?

Sadly the 3% surcharge still remains... However there's still savings to be had of course, on £500,000 we are also saving that £15,000, so still less money to park in the "deal" upfront. This can only be a good thing.

Forever?

Well the key question is of course, how long will this last? At the moment details such as that remain unclear, so should we all rush to buy now? We certainly saw a big rush to complete when the surcharge came in to effect in 2016, so much so that we saw a real boom-bust scenario, artificially inflating prices even. This leads me right into my next point of discussion...

Market forces

I think investors are no different to normal folk that rush into something when they see a bargain, or the end of a sale. We saw this in March 2016 as prices really peaked and then in April they started to fall heavily (transactions fell and hence prices, because people were factoring in the extra stamp duty in their offers, effectively lowering the purchase price to compensate them. Sellers suffered short term. It picked up again of course as we got used to the "new normal" but there was certainly a stall in the market at the time, I remember it well! That, and the B..... announcement of course!

Buy now?

By now, you should realise that I'm sceptical of the current market. I feel that rushing into a deal with an aim to resell the end product could leave you stuck with it. I think that we haven't seen the full effect of the economy shrinking 20% as yet. Companies are still paying furlough wages because they can claim it back from the government. Once the handouts stop will those people still be required? The demand for the product or service their company offers may have shrunk to such an extent that the headcount can be reduced. Keep someone on or simply offer them redundancy? It will take some time to build up to the size they (the company) were before the pandemic for sure. People in the leisure and tourism industry have suffered first and foremost and we'll see more sectors follow suit for sure! So good time to buy? Not sure is my answer. I think prices are inflated currently - we're still seeing amazingly good results in auction houses and I question as to why... When probing other colleagues they think it's because money is cheap and houses are certain. They are certainly less liquid than other investments me thinks, and because of the high transaction costs relative to other forms of investment I'm wagering that people are in it for the longer term. Park the money and sit it out. A new breed of investors, simply looking for a 5% yield and being happy with that for the next decade... I'm not sure that's the way to go, and as you know I'm heavily invested in property!

Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

EICWHAT?

Another day, another law passed.

I'm referring to the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020’ Basically just like a gas safety certificate it's the requirement of a certificate, this time to ascertain the electrics are safe. 

Now I don't know about you, but I get the heebiejeebies when a new law like this has been passed. I mean, when was the last time you got electrocuted in your own place? Right, never I'd imagine. I'd wager that most, responsible, landlords like yourselves and me would never dream of letting a place with extension cords dangling over a fish tank. You know, the kind you see on Rogue Landlords on TV and the like... The government however thinks that this happens all the time. Well, it does happen enough to warrant a TV Series, but still, more red tape me thinks. Electrics are perfectly safe aren't they?? If sparks aren't flying then it's all good, right?

The Flip side

Maybe not... think about the Grenfell tragedy, that was (allegedly) caused by a misfiring fridge or what not. Would the fire have been prevented with a periodic inspection and a PAT test? Perhaps... we'll never know. I think the good thing about this legislation is that it forces reputable landlords to up their game and help PREVENTING the next disaster, and protecting thousands of (perhaps vulnerable) tenants.

Is it a good thing?

If you run a licensed HMO you will be used to having to do some kind of electrical inspection by someone competent anyway, so nothing much changes. If you are the vanilla, single-let kinda guy (or gal) then this will be new to you. In a nutshell we need to throw money at a qualified cowboy that sticks his fingers in sockets for a living to measure how high his hair stands up. 

What is the result?

Out comes a shiny report! Most likely it will have a list of advisories like an MOT, half of which will be absolutely fine until something drastic happens, a bit like a worn tyre, it will only trouble you at the moment that last bit of grip is absolutely necessary. So in a nutshell, it's a good thing! It will certainly prevent tenants from dying due to botched installations, or things that just go wrong. Despite me having all my refurbishments carried out by skilled, qualified professionals there's always something that goes wrong, I got a list that needs to be put right...

A necessary evil me thinks! So if you are in property letting be advised you cannot draw up a new agreement without this new EICR (Electrical Installation Condition Report). It's a 5 year expiry on these, so it's not going to be overly onerous, but you can easily get caught out with these things if you don't keep a tab on them!

Let's summarise:

A good landlord (one that complies with the new legislation) is obliged to:

• Get the property inspected and tested by a qualified and competent person at least every 5 years.
• Obviously get a report for the above to evidence it's been done
• Give the existing tenant a copy of the report within 28 days of the inspection and test.
• Crucial! Supply a copy of the report to a new tenant before they occupy the premises.
• To supply a copy of the report to any prospective tenant within 28 days of receiving a request for the report. I would personally love to let my places this far in advance but it's rare!!
• Supply the local authority with a copy of this report within 7 days if requested.
• keep a copy of the report to give to the tester undertaking the next inspection.
• Complete any remedial work within 28 days or any shorter period if specified.
• Just as with the report you must supply written confirmation of the completion of the remedial to the tenant

For the full snoozefest do go on to the GOV.UK site.

Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.